Thursday, January 28, 2021

Review farm business to prepare for year ahead

December 22, 2020 by  
Filed under News & Business

Eastern region farmers are being urged to review their finances and put their businesses on the strongest possible footing for 2021.

The agricultural sector has faced a myriad of challenges over the last 12 months – with many enterprises forced to think creatively in a bid to diversify their income, says Gwilym Jenkins, from the rural team at Savills, Cambridge.

With 2021 now here  – and fresh changes on the horizon – Mr Jenkins says now is an opportune time for rural businesses to reassess their strategy and look at ways to safeguard their future.

“We have seen a big rise in farmers and landowners asking for advice on future proofing their business,” he says.

Better margins

Most reviews include analysing the core business to identify ways to improve margins. Doing so can also pave the way to free-up capital to invest in diversification and increase alternative income streams.

Scenario planning is often an effective way to prepare for what’s ahead. Appraising property assets, for example, could lead to a decision to create a new business, shared occupation units or improvements to services such as broadband.

“This approach, done well, could lead to the release of redundant farm buildings for commercial and/or residential use to meet the growing demand from those new to remote working who want to relocate to the countryside.

“Excellent connectivity will be a pre-requisite and new or improved social and leisure space will add value for new and existing tenants and residents.”

With incomes coming under pressure, the phase-out of the Basic Payment Scheme will further focus minds. Farming was already confronting a whole host of issues before the challenge of Covid-19, says Mr Jenkins.

Challenges ahead

“On top of that we have potential tax changes and new planning regulations. With so much to consider there is now a real need for farmers who are not currently assessing their future cash requirements to do so swiftly.”

The pandemic served as a timely reminder of the fine balance between success and failure. For some, Covid-19 has had a profound effect on markets and, for others, it has opened up new and exciting opportunities.

“Fears of empty shelves and food shortages have proved ill-founded, while elsewhere estates have partnered with glamping businesses to replace lost visitor attraction income and others have installed on-farm vending machines.”

The past year has seen renewed interest in the contribution of the countryside to wellbeing, food production, tourism and leisure, adds Mr Jenkins. There is huge potential for rural businesses to capitalise on this, he says.